Wednesday, 15 July 2015

Glassdoor findings on the Gender Pay Gap

I was interviewed on Radio 4’s Today programme speaking about the gender pay gap this morning.

The context was Glassdoor’s UK Employment Confidence Survey results released this morning suggesting ongoing increases in employees’ expectations about the future, with 39% of respondents feeling confident about the future of their business (up 3% on the last quarter) and confidence in keeping their job, receiving a pay rise, and being rehired if they do lose their job all remaining at about the levels reached last quarter, and significantly higher than we found last year.

The issue is the wide variety in expectations of male and female employees.  In particular whilst 40% of men believe they’ll receive a pay rise within the next year the figure falls to just 27% for women.  That’s a problem - for women, businesses and the UK economy.

In the budget last week, George Osbourne suggested we want a high skill, high wage economy.  This was reinforced in the UK productivity report published on Friday.  The need to give UK a pay rise is something I’ve written about recently too.  Reward is important because whilst most economists seem to think pay is something that happens after an increase in productivity, my belief is that the link applies in the other direction too.  But for me it’s not the absolute level of pay which is most important (though that will have an impact, in terms of people having funds to spend, stimulating the economy) but the relative differences within organisations, and employees’ expectations about their pay.  If women don’t think they’re going to receive a pay rise, and particularly if they believe that their male colleagues will, then this is going to reduce their engagement, discretionary behaviours, and reduce the impact of Britain’s pay rise on business and national productivity.

I think that's the reason behind David Cameron's recommittment yesterday that companies should be required to report on their gender pay differentials.  As I noted on Today, I think this is a good thing.  As I've posted previously, I’m not generally in favour of quotas or even mandatory reporting but something needs to be done.  The pay gap has been reducing and has pretty much disappeared up to age 40 when it still kicks in, suggesting that much of the problem is about maternity leave, hence the importance of one one of the previous coalition government’s initiatives - shared parental leave (which I talked about on Sky News.)  We’ve also seen a big increase in women’s participation on Boards, with this doubling to 25% over the last 5 years.  But we wan’t wait decades to achieve equality in progression or in pay, so more nudging is required.

Part of the solution will be gaining a better understanding abut why the pay gap exists.  I don't believe there is any conclusive evidence here but as well as a number of other probably more important factors including bias and inertia as well as work preferences and periods of maternity leave, some research studies have suggested that women are less prepared to ask for pay rises, at least when there's no obvious opportunity for them, and they also seem less likely to receive rises even when they do ask for them.

I'm not aware of any research linking men's expectations of a pay rise to these other findings about what actually happens, but it wouldn't be a surprise that that these expectations existed, and there is probably a reinforcing, positive feedback loop between the two things - men are more optimistic of a rise and this acts as an enabling belief when they do ask for one.  Their success in being given a rise then acts to make them more confident the next time they ask for one.  And so on.

Of course that still doesn't explain where either the expectations or actual patterns of pay rises originate from.  But there are differences in male and female brains and differences in our expectations of pay rises may be due in some part to our distinct roles as hunters and carers in our evolutionary history.  However the bigger factor is almost certainly the way boys and girls are socialised differently during their development in childhood and beyond.  So even in the working environment, adult women can be seen as pushy if they ask for a pay rise when similar behaviour in men can be labelled as proactiveness.

I think this was also what was behind, and annoyed people so much when Satya Nadella’s suggested that Microsoft’s women employees leave their pay progression down to karma when he spoke on this last year.

I was asked on Today what women should do if they’re feeling unfairly treated and ignoring the karma suggestion!, recommended they should speak with their manager, HR and if necessary their employee representatives, though they should perhaps check out the useful advice at ACAS first too.  Or of course they can benchmark their salaries more deeply on Glassdoor.  But I’d also encourage organisations to think about the requirement to equalise pay as an opportunity rather than just to meet the intended new regulations.

That encouragement extends to internal pay transparency as well.  Given reduced trust in business we can’t just expect women to believe they’re paid as well as men - we need to show this to them too.  Particularly as increasingly all these salaries are publicly available on Glassdoor’s site.  And it need not be as big an issue as many organisations might believe.  For example in Glassdoor’s research on this earlier in the year, 60% of respondents suggested companies should be forced to be more transparent about pay.  52% thought this would create more trust between employer and its employees, 48% said it would create a more level playing field and 45% suggested it would help eliminate the gender pay gap - you might also be interested in Glassdoor’s great report into salary transparency.

So to me, external reporting is only the first part of a more radical change organisations are going to have to undergo over the next few years (I don’t believe it will take as long as a generation.)  For one thing, business is rapidly becoming a woman’s world - it can’t be that long before men will start to become the less well paid.

I'd be interested on your comments on what I think is a quite complex area.  I'd be particularly interested in hearing the views of women readers - it's obviously not ideal to have two men discussing women's lack of confidence - though as a regular Today listener, it was great to appear on the programme.

Also see my other posts on Glassdoor:

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